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Saturday, November 29, 2008

Malaysian Growth Slows Sharply

Source : The Business Times, November 29, 2008

(Kuala Lumpur)MALAYSIA'S economic growth slid sharply in the third quarter to its slowest pace since mid-2005 as the global slowdown started to hit and the central bank said that it was ready to cut rates again if needed.

Annual gross domestic product growth slowed to 4.7 per cent in Q3, data showed yesterday, down from 6.7 per cent in the second quarter, and just above a 4.5 per cent increase forecast in a Reuters poll.

Earlier this week, data showed growth cooling in the Philippines and Thailand, and the World Bank forecast a sharp slowdown in China next year, while Japan posted a larger-than-expected fall in industrial production yesterday.

Malaysia's central bank governor, Zeti Akhtar Aziz, said that interest rates, cut this week to 3.25 per cent from 3.5 per cent, were not restricting bank lending, though she said that the central bank was ready to act again.

This week's rate reduction was the first in five years.

At a press conference, Ms Aziz said that Malaysia would not slip into a recession in 2009, and she forecast that inflation would drop to less than 3 per cent in the second half of 2009, down from 7.6 per cent in October, the latest month for which data is available.

The Malaysian government, which cut its growth forecast to 3.5 per cent from 5.4 per cent, has announced a US$2 billion stimulus package to boost the domestic economy so as to offset weakening exports. -- Reuters